The suezmax Serene Sky is in the process of being sold as she is not found suitable for the key projects currently targeted by Prosafe. Consequently, the book value of the vessel is adjusted to reflect anticipated market value resulting in a write-down of NOK 17 mill in the fourth quarter 2003. A subsequent sale of the vessel is expected to reduce net interest bearing debt by approx. USD 7.5 mill and operating expenses (lay-up costs) by approx. USD 75,000 per month.
The final costs from the well intervention campaign carried out last autumn (period mid-August through to late November 2003), and unexpected labour costs due to differing interpretation of Norwegian wage tariff agreements for vessels in lay-up in Norway, reduce the operating profit (EBIT) in the company's Offshore Support Services division in the fourth quarter 2003 by approx. NOK 15 mill.
Changed assumptions regarding calculation of future pension liabilities, and a write-down of the book value of two cuttings reinjection units currently being marketed for sale, reduce the operating profit (EBIT) in the company's Drilling Services division in the fourth quarter 2003 by approx. NOK 13 mill.
In sum, this means that Prosafe expects to report a consolidated operating profit (EBIT) for the full year 2003 of approx. NOK 360 mill.
2003 has been the best year in the history of the company in terms of securing order backlog and earnings visibility. Correspondingly, the company has recently reduced debt instalments over the next two years by USD 50 mill against an increased bullet amount in 2009, and is also in the process of drawing down a new USD 30 mill debt facility. In sum, this enhances the company's financial flexibility going forward.
Prosafe's fleet of rigs in the Offshore Support Services division is secured a utilisation of 81% excluding options in 2004, 62.5% for the years 2005-2007 and 30% in 2008. Prospects for further work beyond 2004 remain positive. In Drilling Services, the company has maintained its market leading position, and is set to deliver the second-best operating profit ever in 2003. In Floating Production, the company has all vessels/operations (excl. suezmax Serene Sky) secured on contracts, and the company focuses on winning a new FPSO conversion project in line with the company's stated strategy direction and financial return targets.
Prosafe's financial position and the general business outlook remain strong, and financial performance in 2004 is set to show a solid improvement over 2003. Reflecting historic performance and future outlook, the company recently declared an extraordinary dividend payable in January 2004, and simultaneously announced a new and more specific dividend policy to be followed going forward in combination with continued focus on profitable development and value creation.
Prosafe is the world's leading owner and operator of semi-submersible service rigs, the largest platform drilling contractor in Norway and a major owner and operator of floating production and storage vessels outside the North Sea. Operating revenues reached NOK 2.9 billion in 2002. The company employs approx. 2,000 people. Prosafe operates in the North Sea, South-East Asia, India, Egypt, West Africa and the Gulf of Mexico. The company is headquartered in Stavanger, Norway. Prosafe is listed on the Oslo Stock Exchange with ticker code PRS. For more information, please refer to http://www.prosafe.com.